E M P L O Y E E S R E T I R E M E N T S Y S T E M O F R H O D E I S L A ND ACTUARIAL VALUATION R E P O R T AS OF J U N E 3 0, 201 6
December 19, 2016 Retirement Board 50 Service Avenue, 2nd Floor Warwick, RI 02886-1021 Dear Members of the Board: Subject: Actuarial Valuation of ERSRI as of June 30, 2016 This is the June 30, 2016 actuarial valuation of the Employees Retirement System of Rhode Island (ERSRI), which is a defined benefit plan that covers State Employees and Teachers. This report describes the current actuarial condition of ERSRI, determines recommended employer contribution rates, and analyzes changes in these contribution rates. Valuations are prepared annually, as of June 30 th, the last day of the ERSRI plan year. Not covered in this report are the Municipal Employees' Retirement System, the State Police Retirement Benefits Trust, the Judicial Retirement Benefits Trust, and the Teachers Survivor Benefits Plan, even though assets for ERSRI and these other programs are commingled for investment purposes. Additionally, this report does not consider the contribution requirements associated with any defined contribution benefits provided to State Employees and Teachers outside of the defined benefit plan. Under Rhode Island General Laws, the employer contribution rates for State Employees and for Teachers are certified annually by the State of Rhode Island Retirement Board. These rates are determined actuarially, based on the plan provisions in effect as of the valuation date, the actuarial assumptions adopted by the Board, and the methodology set forth in the statutes. The Board s current policy is that the contribution rates determined by a given actuarial valuation become effective two years after the valuation date. For example, the rates determined by this June 30, 2016 actuarial valuation will be applicable for the year beginning July 1, 2018 and ending June 30, 2019. Financing objectives The actuarial cost method and the amortization periods are set by statute. Normal cost rate (as a percent of pay) and actuarial accrued liabilities are computed using the Entry Age Normal actuarial cost method. The employer contribution rate is the sum of two pieces: the employer normal cost rate and the amortization rate. The employer normal cost rate is the difference between the normal cost rate and the member contribution rate. The amortization rate, also determined as a level percent of pay, is the amount required to amortize the unfunded actuarial accrued liability over a closed period. The amortization rate is adjusted for the two-year deferral
Members of the Board December 19, 2016 Page 2 in contribution rates. Separate employer contribution rates are determined for State Employees and for Teachers. Progress toward realization of financing objectives The funded ratio (the ratio of the actuarial value of assets to the actuarial accrued liability) is a standard measure of a plan s funded status. The funded status alone is not appropriate for assessing the need for future contributions. The funded status is not appropriate for assessing the sufficiency of plan assets to cover the estimated cost of settling the plan's benefit obligations. The funded ratio for State Employees is 56.0% while the funded ratio for Teachers is 58.3%. These funded ratios decreased slightly from the prior valuation primarily due to an actuarial loss from the 5.5% return on the actuarial value of assets being less than the assumed rate of 7.5%. Given the plan s contribution allocation procedure, if all actuarial assumptions are met (including the assumption of the plan earning 7.50% on the actuarial valuation of assets), it is expected that: 1. The employer normal cost as a percentage of pay will decrease to the level of the newest tier as the old tier population declines and is replaced by new tier members (approximately, 6.60% for the State and 5.72% for Teachers), 2. The amortization payment as a percentage of pay will remain level through fiscal year 2036, 3. The unfunded actuarial accrued liability will be fully amortized after 19 years for the State and 21 years for Teacher from fiscal year 2019, and 4. In the absence of benefit improvements, the funded ratio should increase over time, until it reaches 100%. The employer contribution rate for State Employees is 25.75% while the employer contribution rate for Teachers is 23.51%. These employer contribution rates determined by this June 30, 2016 actuarial valuation will be applicable for the year beginning July 1, 2018 and ending June 30, 2019. An analysis of the changes in the employer contribution rates appears in Table 11A of this report. An analysis of the changes in the unfunded actuarial accrued liability appears in Table 11C. Benefit provisions The benefit provisions reflected in this valuation are those which were in effect on June 30, 2016, and there have been no changes to the benefit provisions since the preceding valuation. All benefit provisions are summarized in Appendix B.
Members of the Board December 19, 2016 Page 3 Assumptions and methods The assumptions are unchanged from the last actuarial valuation and were approved by the Board on June 18, 2014. We believe the assumptions are internally consistent and are reasonable, based on the actual experience of ERSRI. The results of the actuarial valuation are dependent upon the actuarial assumptions used. Actual results can and almost certainly will differ, as actual experience deviates from the assumptions. Even seemingly minor changes in the assumptions can materially change the liabilities and the calculated contribution rates. All assumptions and methods are described in Appendix A. The actuarial assumptions and methods used in this report comply with the parameters for disclosure that appear in Governmental Accounting Standards Board (GASB) Statement Number 67. Data The ERSRI staff supplied data for retired, active and inactive members as of June 30, 2016. We did not audit this data, but we did apply a number of tests to the data, and we concluded that it was reasonable and consistent with the prior year's data. The ERSRI staff also supplied asset data as of June 30, 2016. Certification All of our work conforms with generally accepted actuarial principles and practices, and with the Actuarial Standards of Practice issued by the Actuarial Standards Board. In our opinion, our calculations also comply with the requirements of Rhode Island state law and, where applicable, the Internal Revenue Code, ERISA, and the Statements of the Governmental Accounting Standards Board. The undersigned are independent actuaries. All are Members of the American Academy of Actuaries. They all meet the Qualification Standards of the American Academy of Actuaries and they are experienced in performing valuations for large public retirement systems. Respectfully submitted, Joseph P. Newton, FSA, MAAA, EA Paul T. Wood, ASA, MAAA, FCA Bradley E. Stewart, ASA, MAAA, EA
Table of Contents Section A Executive Summary Table of Contents State Employees... 3 Teachers... 4 Section B Discussion... 5 Section C Tables Page 1A Development of Contribution Rate (State Employees)... 11 1B Development of Contribution Rate (Teachers)... 12 2 Summary of Unfunded Liability... 13 3A Actuarial Present Value of Future Benefits (State Employees) 14 3B Actuarial Present Value of Future Benefits (Teachers)... 15 3C Ten-Year Projections (State Employees)... 16 3D Ten-Year Projections (Teachers)... 17 4 Schedule of Funding Progress... 18 5 Notes to Required Supplementary Information... 19 6 Plan Net Assets... 20 7 Reconciliation of Plan Net Assets... 21 8A Development of Actuarial Value of Assets (State Employees) 22 8B Development of Actuarial Value of Assets (Teachers)... 23 9 Distribution of Assets at Market Value... 24 10 History of Investment Return Rates... 25 11A Analysis of Change in Employer Cost... 26 11B History of Employer Contribution Rates... 27 11C Analysis of Change in the UAAL... 28 12A Membership Data (State Employees)... 29 12B Membership Data (Teachers)... 30 13 Historical Summary of Active Member Data... 31 14A Distribution of Active Members by Age and By Years of Service (State Employees)... 14B Distribution of Active Members by Age and By Years of Service (Teachers)... 32 33 1
Table of Contents Table of Contents (continued) Page Appendices Appendix A Summary of Actuarial Assumptions and Methods... 34 Appendix B Summary of Provisions... 48 Glossary... 58 2
Section A - Executive Summary Executive Summary (State Employees) Item Valuation Date: June 30, 2016 June 30, 2015 Membership Number of: - Active members 11,083 11,194 - Retirees and beneficiaries 11,058 11,041 - Inactive members 3,071 2,948 - Total 25,212 25,183 Previous year payroll supplied by ERSRI $ 671,420,995 $ 669,787,489 Contribution rates (Defined Benefit Only) Member* 4.21% 4.21% Employer 25.75% 24.87% Assets Market value $ 2,288,446,139 $ 2,428,989,395 Actuarial value 2,468,446,998 2,476,485,327 Return on market value -0.2% 2.2% Return on actuarial value 5.5% 7.3% Employer contribution for FYE $ 159,534,421 $ 156,336,787 Ratio of actuarial value to market value 107.9% 102.0% Actuarial Information Employer normal cost % 4.38% 4.58% Unamortized actuarial accrued liability (UAAL) $ 1,935,851,650 $ 1,895,304,573 Amortization rate 21.37% 20.29% Single Equivalent Funding period 19.1 years 20.0 years Funded ratio 56.0% 56.6% Projected employer contribution Fiscal year ending June 30, 2019 2018 Projected payroll (millions) $ 739.0 $ 737.2 Projected employer contribution (millions) 190.3 183.4 * Member contribution rate is based on the weighted average of State Employees contributing 3.75% and Correctional Officers contributing 8.75%. 3
Section A - Executive Summary Executive Summary (Teachers) Item Valuation Date: June 30, 2016 June 30, 2015 Membership Number of: - Active members 13,206 13,272 - Retirees and beneficiaries 11,087 10,902 - Inactive members 3,313 3,185 - Total 27,606 27,359 Previous year payroll supplied by ERSRI $ 980,562,840 $ 966,985,115 Contribution rates (Defined Benefit Only) Member 3.75% 3.75% Employer 23.51% 23.13% State share 10.06% 9.89% Local employer share 13.45% 13.24% Assets Market value $ 3,510,586,538 $ 3,730,047,183 Actuarial value 3,772,348,051 3,783,601,053 Return on market value -0.2% 2.2% Return on actuarial value 5.5% 7.3% Employer contribution (state & local) $ 225,569,556 $ 217,902,736 Ratio of actuarial value to market value 107.5% 101.4% Actuarial Information Employer normal cost % 4.09% 4.25% Unamortized actuarial accrued liability (UAAL) $ 2,694,130,419 $ 2,655,131,047 Amortization percentage 19.42% 18.88% Single Equivalent Funding period 21.2 years 22.3 years Funded ratio 58.3% 58.8% Projected employer contribution Fiscal year ending June 30, 2019 2018 Projected payroll (millions) $ 1,071.5 $ 1,056.7 Projected employer contribution (millions) 251.9 244.4 State share (millions) 107.8 104.5 Local employer share (millions) 144.1 139.9 4
Discussion Contribution Rates The employer contribution rates for ERSRI are determined actuarially. Separate rates are determined for State Employees and for Teachers. The rates determined in this valuation become effective two years after the valuation date, i.e., as of July 1, 2018. The rate consists of two pieces: the normal cost rate and the amortization rate. The normal cost rate is the employer s Entry Age normal cost, expressed as a percentage of active member payroll. The amortization rate is the contribution required to amortize the unfunded actuarial accrued liability over 19 years as a level percentage of payroll. For the Teachers, the State of Rhode Island pays 40% of the rate, adjusted so that the State pays the entire amortization charge for the 1990/91 and 1991/92 deferrals, and the town or city employing the Teacher pays the balance. Local State Total Amortization for FY 91 and 92 deferrals 0.00% 0.29% 0.29% Normal cost and all other amortizations 13.45% 9.77% 23.22% Total 13.45% 10.06% 23.51% 5
Discussion Impact of Decrease in Contribution Rates Under Rhode Island General Laws (RIGL) 36-10-2(e), if the State s actuarially determined contribution rate for State Employees or for Teachers for a fiscal year will be less than in the preceding fiscal year, the Governor is required to include an appropriation to ERSRI in the fiscal year budget equal to 20% of the reduction. Because the FYE 2019 contribution rate for both the State Employees and the State share for Teachers are higher than the rates for FYE 2018, no additional appropriation will be required. 6
Discussion Financial Data and Experience Assets for ERSRI are held in trust and are commingled with those of several other plans and programs for investment purposes. The State Investment Commission is responsible for setting the asset allocation policy and for investing the funds. The ERSRI assets are then allocated by the ERSRI staff among State Employees, Teachers, and the Teachers Survivor Benefits Plan. Table 6 of this report shows the net plan assets for ERSRI in total, and it shows the breakdown between State Employees, Teachers and the Teachers Survivor Benefits Plan. Table 7 of this report shows a reconciliation of the assets for State Employees and Teachers between the previous valuation and this valuation. Table 9 shows the distribution of investments by category 79% of assets are held in equities, including real estate and private equity and Table 10 shows a historical summary of the return rates. As can be seen, the net market value rate of return was (0.2%) for the year ended June 30, 2016, and the return on an actuarial asset value basis was 5.5%. The average annual return based on the market value of assets over the last ten years (July 1, 2006 June 30, 2016) was 4.8%. This is less than the current 7.5% annual investment return assumption. All returns above are net of both investment and administrative expenses and may differ from other information provided by the General Treasurer s office or the investment managers and advisors due to timing of reflected cash flows, frequency of compounding, and treatment of administrative expenses. The ERSRI staff provided all of the financial information used in this report. 7
Discussion Member Data The ERSRI staff supplied member data as of June 30, 2016. While we did not audit this data, we did perform various tests to ensure that it was internally consistent, consistent with the prior year s data, and was reasonable overall. Information provided for active members includes: name, an identification number, gender, a code indicating whether the member was active or inactive, a code indicating employee type (State Employee or Teacher), date of birth, service, salary, date of last contribution, accumulated member contributions without interest, accrued benefit multiplier as of June 30, 2016, Final Average Compensation as of June 30, 2012, Article 7 Retirement Date, and the Rhode Island Retirement Security Act Retirement Date. For retired members, data includes: name, an identification number, gender, date of birth, date of retirement, amount of benefit, the amount of adjustment after age 62 for anyone electing the Social Security option, a code indicating the option elected and the type of retiree (service retiree, disabled retiree, beneficiary), and if applicable, the joint pensioner s date of birth and gender. Tables 12A and 12B of this report show the number of members by category (active, inactive, retired, etc.). Table 13 of this report shows a historical summary of active member statistics, and Tables 14A and 14B show the distribution of active members by age and service. The total payroll shown in the statistical tables is the amount that was supplied by ERSRI for the preceding fiscal year, annualized for new entrants as appropriate. For the cost calculations, ERSRI staff provided the actual aggregate payroll for the prior fiscal year and it was rolled forward by one year s payroll growth rate. 8
Discussion Benefit Provisions Appendix B includes a summary of the benefit provisions for ERSRI. There were no material changes in the benefit provisions since the preceding valuation. The COLA to be provided to retired members is contingent on the investment performance, the annual change in the CPI-U, and funded status of the System. The amount of the COLA is determined based on 50% of the plan s five-year average investment rate of return minus 5.5% and will range from zero to 4.0%, and 50% of the lesser of 3% or last year s CPI-U increase for a total maximum increase of 3.50%. This calculation produces a 0.74% COLA for Calendar Year 2017. The COLA will be limited and this limit will be indexed annually to increase in the same manner as COLAs, with the known values of $25,855 for 2016, $26,098 for 2017, and $26,290 for 2018. Furthermore, the COLA will be suspended for all state employees, teachers, BHDDH nurses, correctional officers, judges and state police until the aggregate funding level of their plans exceeds 80%; however, an interim COLA will be granted in four-year intervals while the COLA is suspended. The first interim COLA may begin January 1, 2017. Also, for current retirees and beneficiaries retired on or before July 1, 2015 the $25,000 cap will be increased to $30,000 (indexed) for any COLA payable based on the every fourth year provision. 9
Discussion Actuarial Methods and Assumptions Appendix A of this report includes a summary of the actuarial assumptions and methods used in this valuation. Costs are determined using the Entry Age Normal actuarial cost method. This method was initially adopted effective June 30, 1999 and was modified, effective June 30, 2011, to be consistent with the Act and the standards outlined in the GASB Statement No. 67 exposure draft, which has now been finalized. The method used to determine the actuarial value of assets is the five-year smoothed market method. This technique is further described in Section III of Appendix A. The development of the actuarial value of assets utilizing this method is shown in Tables 8A and 8B of this report. These assumptions were adopted by the Board on June 18, 2014. We believe the assumptions are internally consistent and are reasonable, based on the actual experience of ERSRI. 10
Section C Table 1A Development of Contribution Rate (State Employees) June 30, 2016 June 30, 2015 (1) (2) 1. Aggregate payroll (a) Supplied by ERSRI for previous fiscal year $ 671,420,995 $ 669,787,489 (b) Adjusted for one-year's payroll growth 693,242,177 691,555,582 2. Actuarial accrued liability 4,404,298,648 4,371,789,900 3. Actuarial value of assets 2,468,446,998 2,476,485,327 4. Unfunded actuarial accrued liability (UAAL) (2-3) 1,935,851,650 1,895,304,573 5. Remaining amortization period at valuation date 19.1 20.0 6. Contribution effective for fiscal year ending: June 30, 2019 June 30, 2018 7. Payroll projected for two-year delay 739,035,156 737,237,151 8. Amortization of UAAL 157,945,514 149,555,558 9. Normal cost (a) Total normal cost rate 8.59% 8.79% (b) Employee contribution rate 4.21% 4.21% (c) Employer normal cost rate ( a - b ) 4.38% 4.58% 10. Employer contribution rate as percent of payroll (a) Employer normal cost rate 4.38% 4.58% (b) Amortization payments ( 8 / 7 ) 21.37% 20.29% (c) Total ( a + b ) 25.75% 24.87% 11. Estimated employer contribution amount (7 * 10(c)) $ 190,301,553 $ 183,350,879 11
Section C Table 1B Development of Contribution Rate (Teachers) June 30, 2016 June 30, 2015 (1) (2) 1. Aggregate payroll (a) Supplied by ERSRI for previous fiscal year $ 980,562,840 $ 966,985,115 (b) Adjusted for one-year's payroll growth 1,009,979,725 995,994,669 2. Actuarial accrued liability 6,466,478,470 6,438,732,100 3. Actuarial value of assets 3,772,348,051 3,783,601,053 4. Unfunded actuarial accrued liability (UAAL) (2-3) 2,694,130,419 2,655,131,047 5. Remaining amortization period at valuation date 21.2 22.3 6. Contribution effective for fiscal year ending: June 30, 2019 June 30, 2018 7. Payroll projected for two-year delay 1,071,487,490 1,056,650,744 8. Amortization of UAAL 208,032,616 199,489,698 9. Normal cost (a) Total normal cost rate 7.84% 8.00% (b) Employee contribution rate 3.75% 3.75% (c) Employer normal cost rate ( a - b ) 4.09% 4.25% 10. Employer contribution rate as percent of payroll (a) Employer normal cost rate 4.09% 4.25% (b) Amortization payments ( 8 / 7 ) 19.42% 18.88% (c) Total ( a + b ) 23.51% 23.13% 11. Estimated employer contribution amount (7 * 10(c)) $ 251,906,709 $ 244,403,317 12
Section C Table 2 Summary of Unfunded Liability State Employees Purpose Remaining Balance as of June 30, 2016 Fiscal Year 2017 Amortization Payment Fiscal Year 2018 Amortization Payment Fiscal Year 2019 Amortization Payment Years Remaing Beginning with Fiscal Year 2019 FY 1991 and FY 1992 Deferrals $ 28,928,724 $ 2,214,638 $ 2,286,614 $ 2,360,929 17 Original 2011 RIRSA Base 1,829,050,744 140,022,933 144,573,678 149,272,323 17 2014 Experience Base (49,552,545) (3,667,630) (3,786,828) (3,909,900) 18 2014 Mediation Settlement 118,713,927 8,786,608 9,072,173 9,367,019 18 2015 Experience Base (32,552,543) - (2,590,079) (2,674,257) 19 New Experience Base This Fiscal Year 41,263,343 - - 3,529,400 20 Unfunded Actuarial Accrued Liability $ 1,935,851,650 $ 147,356,549 $ 149,555,558 $ 157,945,514 Teachers Purpose Remaining Balance as of June 30, 2016 Fiscal Year 2017 Amortization Payment Fiscal Year 2018 Amortization Payment Fiscal Year 2019 Amortization Payment Years Remaing Beginning with Fiscal Year 2019 FY 1991 and FY 1992 Deferrals (State) $ 38,040,940 $ 2,967,572 $ 3,056,599 $ 3,148,297 17 Original 2011 RIRSA Base (State) 1,008,678,826 78,686,997 81,047,607 83,479,035 17 Original 2011 RIRSA Base (Local) 1,536,706,585 106,518,298 109,713,847 113,005,262 21 2014 Experience Base (State) (16,706,422) (1,261,151) (1,298,986) (1,337,956) 18 2014 Experience Base (Local) (25,059,633) (1,737,033) (1,789,144) (1,842,818) 21 2014 Mediation Settlement (State) 68,416,064 5,164,659 5,319,599 5,479,187 18 2014 Mediation Settlement (Local) 102,624,096 7,113,488 7,326,893 7,546,700 21 2015 Experience Base (47,895,066) - (3,886,716) (4,003,317) 19 New Experience Base This Fiscal Year 29,325,029 - - 2,558,226 20 Unfunded Actuarial Accrued Liability $ 2,694,130,419 $ 197,452,830 $ 199,489,699 $ 208,032,616 State Portion of UAAL Payment $ 90,190,527 Local Portion of UAAL Payment $ 117,842,089 13
Section C Table 3A Actuarial Present Value of Future Benefits (State Employees) June 30, 2016 June 30, 2015 (1) (2) 1. Active members a. Service retirement benefits $ 1,701,875,881 $ 1,710,643,382 b. Deferred termination benefits 51,198,877 53,452,115 c. Refunds 4,566,291 4,563,337 d. Pre-retirement death benefits 44,707,516 43,216,945 e. Disability retirement benefits 113,128,567 112,666,373 f. Total $ 1,915,477,132 $ 1,924,542,152 2. Retired members a. Service retirements $ 2,483,448,332 $ 2,475,991,320 b. Disability retirements 150,066,608 144,466,599 c. Beneficiaries 179,169,929 175,564,119 d. Post-retirement death benefit 16,580,000 16,459,000 e. Stipends payable 5,529,000 11,041,000 e. Total $ 2,834,793,869 $ 2,823,522,038 3. Inactive members $ 137,964,511 $ 120,385,094 4. Total actuarial present value of future benefits $ 4,888,235,512 $ 4,868,449,284 5. Determination of actuarial accrued liability a. Total actuarial present value of future benefits $ 4,888,235,512 $ 4,868,449,284 b. Less present value of future normal costs (431,682,129) (439,326,104) c. Less present value of supplemental member contributions (52,254,735) (57,333,280) d. Actuarial accrued liability (a + b) $ 4,404,298,648 $ 4,371,789,900 14
Section C Table 3B Actuarial Present Value of Future Benefits (Teachers) June 30, 2016 June 30, 2015 (1) (2) 1. Active members a. Service retirement benefits $ 2,323,291,883 $ 2,325,578,453 b. Deferred termination benefits 64,216,877 68,283,983 c. Refunds 4,808,871 4,860,767 d. Pre-retirement death benefits 43,442,365 42,627,178 e. Disability retirement benefits 89,994,831 88,663,858 f. Total $ 2,525,754,827 $ 2,530,014,239 2. Retired members a. Service retirements $ 4,362,406,847 $ 4,360,476,742 b. Disability retirements 81,776,605 80,636,993 c. Beneficiaries 118,461,243 116,069,601 d. Post-retirement death benefit 14,607,000 14,079,000 e. Stipends payable 5,543,500 10,902,000 f. Total $ 4,582,795,195 $ 4,582,164,336 3. Inactive members $ 151,539,340 $ 143,602,577 4. Total actuarial present value of future benefits $ 7,260,089,362 $ 7,255,781,152 5. Determination of actuarial accrued liability a. Total actuarial present value of future benefits $ 7,260,089,362 $ 7,255,781,152 b. Less present value of future normal costs (733,241,225) (748,059,479) c. Less present value of supplemental member contributions (60,369,667) (68,989,573) d. Actuarial accrued liability (a + b) $ 6,466,478,470 $ 6,438,732,100 15
Section C Table 3C Ten-Year Projections (State Employees) Unfunded For Fiscal Benefit Valuation Actuarial Calculated Market Value Year Covered Payments, Net as of Accrued Liability Funded Contribution of Fund Ending Compensation Employer Employee Refunds, and External June 30, (in Millions) Ratio Rate (in Millions) June 30, (in Millions) Contributions Contributions Administrative Cash Flow (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) 2016 $ 1,935.9 56.0% 25.34% $ 2,288.4 2017 $ 693.2 $ 175.7 $ 40.6 $ 346.2 $ (129.9) 2017 1,992.3 55.2% 24.87% 2,325.4 2018 715.8 178.0 40.2 354.4 (136.2) 2018 2,045.5 54.4% 25.75% 2,358.5 2019 739.0 190.3 39.9 356.9 (126.7) 2019 2,085.4 53.9% 26.11% 2,404.1 2020 759.0 198.2 39.5 361.7 (124.0) 2020 2,104.0 53.9% 26.50% 2,455.8 2021 775.8 205.6 39.2 364.6 (119.9) 2021 2,060.3 55.0% 26.94% 2,515.6 2022 792.9 213.6 38.9 372.9 (120.4) 2022 2,021.3 56.1% 27.40% 2,579.4 2023 814.1 223.0 38.8 377.4 (115.5) 2023 1,969.4 57.4% 27.34% 2,653.1 2024 839.8 229.6 39.0 380.6 (112.0) 2024 1,907.0 58.9% 27.45% 2,735.9 2025 867.2 238.1 39.4 383.9 (106.4) 2025 1,834.4 60.7% 27.34% 2,830.8 2026 895.7 244.8 40.0 390.0 (105.2) 2026 1,746.2 62.7% 27.26% 2,934.0 2027 925.0 252.1 40.6 390.5 (97.7) Projections assume all assumptions exactly met, including an annual 7.50% return on the current market value of assets. 16
Section C Table 3D Ten-Year Projections (Teachers) Unfunded For Fiscal Benefit Valuation Actuarial Calculated Market Value Year Covered Payments, Net as of Accrued Liability Funded Contribution of Fund Ending Compensation Employer Employee Refunds, and External June 30, (in Millions) Ratio Rate (in Millions) June 30, (in Millions) Contributions Contributions Administrative Cash Flow (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) 2016 $ 2,694.1 58.3% 23.13% $ 3,510.6 2017 $ 1,010.0 $ 233.6 $ 49.1 $ 504.0 $ (221.3) 2017 2,783.4 57.3% 23.13% 3,544.4 2018 1,040.3 240.6 49.4 506.9 (216.9) 2018 2,866.0 56.4% 23.51% 3,585.4 2019 1,071.5 251.9 49.8 504.7 (203.0) 2019 2,937.5 55.7% 24.04% 3,643.8 2020 1,102.5 265.1 50.2 506.7 (191.4) 2020 2,981.4 55.5% 24.49% 3,718.6 2021 1,133.3 277.6 50.5 506.6 (178.5) 2021 2,930.6 56.5% 24.88% 3,812.3 2022 1,165.0 289.9 50.8 515.5 (174.8) 2022 2,887.9 57.6% 25.15% 3,917.0 2023 1,199.7 301.8 51.2 518.2 (165.2) 2023 2,829.2 58.8% 24.84% 4,039.5 2024 1,236.2 307.1 51.6 519.9 (161.1) 2024 2,760.6 60.2% 24.69% 4,175.4 2025 1,275.7 315.0 52.2 522.9 (155.6) 2025 2,683.0 61.7% 24.56% 4,327.2 2026 1,315.3 323.0 52.7 531.9 (156.1) 2026 2,586.4 63.4% 24.38% 4,489.8 2027 1,356.5 330.8 53.5 532.1 (147.9) Projections assume all assumptions exactly met, including an annual 7.50% return on the current market value of assets. 17
Section C - Table 4 Schedule of Funding Progress Unfunded Actuarial Accrued Liability Valuation Actuarial Value of Actuarial Accrued (UAAL) Funded Ratio Annual Covered UAAL as % of Date Assets (AVA) Liability (3)-(2) (2)/(3) Payroll Payroll (4)/(6) (1) (2) (3) (4) (5) (6) (7) State Employees June 30, 2007 2,493,428,522 4,332,888,818 1,839,460,296 57.5% 660,044,273 278.7% June 30, 2008 2 2,700,368,568 4,331,504,516 1,631,135,948 62.3% 587,500,000 277.6% June 30, 2009 2,646,081,020 4,482,244,291 1,836,163,271 59.0% 605,872,460 303.1% June 30, 2010 3 2,532,090,798 4,651,175,973 2,119,085,175 54.4% 632,503,225 335.0% June 30, 2010 2,532,090,798 5,232,541,325 2,700,450,527 48.4% 630,246,973 428.5% June 30, 2010 4 2,532,090,798 4,234,409,675 1,702,318,877 59.8% 630,246,973 270.1% June 30, 2011 2,443,690,798 4,255,362,463 1,811,671,665 57.4% 633,146,197 286.1% June 30, 2012 2,421,191,542 4,297,261,311 1,876,069,769 56.3% 669,477,539 280.2% June 30, 2013 5 2,411,057,214 4,266,053,163 1,854,995,949 56.5% 664,118,904 279.3% June 30, 2014 6 2,449,125,421 4,369,081,872 1,919,956,451 56.1% 675,204,750 284.4% June 30, 2015 2,476,485,327 4,371,789,900 1,895,304,573 56.6% 691,555,582 274.1% June 30, 2016 2,468,446,998 4,404,298,648 1,935,851,650 56.0% 693,242,177 279.2% Teachers June 30, 2007 3,737,981,686 6,750,125,236 3,012,143,550 55.4% 959,372,837 314.0% June 30, 2008 2 4,044,954,378 6,632,016,708 2,587,062,330 61.0% 985,898,174 262.4% June 30, 2009 4,008,931,337 6,900,963,108 2,892,031,771 58.1% 987,463,633 292.9% June 30, 2010 3 3,873,118,262 7,150,987,128 3,277,868,866 54.2% 992,874,301 330.1% June 30, 2010 3,873,118,262 8,006,313,862 4,133,195,600 48.4% 989,236,951 417.8% June 30, 2010 4 3,873,118,262 6,266,400,444 2,393,282,182 61.8% 989,236,951 241.9% June 30, 2011 3,776,407,834 6,325,941,951 2,549,534,117 59.7% 1,002,656,294 254.3% June 30, 2012 3,746,299,871 6,373,081,344 2,626,781,473 58.8% 971,904,991 270.3% June 30, 2013 5 3,697,787,537 6,265,311,945 2,567,524,408 59.0% 963,525,547 266.5% June 30, 2014 6 3,742,152,714 6,424,596,267 2,682,443,553 58.2% 982,565,406 273.0% June 30, 2015 3,783,601,053 6,438,732,100 2,655,131,047 58.8% 995,994,669 266.6% June 30, 2016 3,772,348,051 6,466,478,470 2,694,130,419 58.3% 1,009,979,725 266.8% 2 Restated June 30, 2008 actuarial value after reflecting the amendment of Article 16 3 June 30, 2010 actuarial value before changes of actuarial assumptions 4 Restated June 30, 2010 actuarial value after reflecting the Rhode Island Retirement Security Act of 2011 5 June 30, 2013 actuarial value after changes of actuarial assumptions 6 June 30, 2014 actuarial value after reflecting the amendment of Article 21 18
Section C Table 5 Notes to Required Supplementary Information Item (1) State Employees Teachers (2) (3) Valuation date June 30, 2016 June 30, 2016 Actuarial cost method Entry Age Normal Entry Age Normal Amortization method Level percentage, closed Level percentage, closed Remaining amortization period 19 years 21 years Asset valuation method 5-Yr Smoothed Market 5-Yr Smoothed Market Actuarial assumptions: Investment rate of return * 7.50% 7.50% Projected salary increase * 3.50% to 6.50% 3.50% to 13.50% * Includes inflation at: 2.75% 2.75% Cost of living adjustments 2.20% 2.20% COLAs are currently suspended for all state employees, teachers, BHDDH nurses, correctional officers, judges and state police until the aggregate funding level of their plans exceeds 80%. It is assumed that the COLAs will be suspended for 11 years due to the current funding level of the plans; however, an interim COLA may be granted in four-year intervals while the COLA is suspended. 19
Section C Table 6 Plan Net Assets (Assets at Market or Fair Value) Item (1) June 30, 2016 June 30, 2015 (2) (3) A. Total ERSRI assets 1. Cash and cash equivalents $ 4,658,965 $ 4,345,985 2. Receivables: a. Transfers receivable $ 0 $ 0 b. Member and employer contributions 53,353,742 29,483,780 c. Due from state for teachers 23,189,688 17,656,319 d. Net investment income and other 2,452,940 901,785 e. Total receivables $ 78,996,370 $ 48,041,884 3. Investments a. Short-term investment fund $ 0 $ 0 b. Pooled trust 6,001,754,566 6,401,307,203 c. Plan specific investments 0 0 d. Invested securities lending collateral 0 0 e. Total $ 6,001,754,566 $ 6,401,307,203 4. Prepaid expenses $ 4,551,870 $ 3,412,040 5. Total assets $ 6,089,961,771 $ 6,457,107,112 6. Liabilities a. Due to other plans $ 10,365 $ 0 b. Accounts and vouchers payable 4,433,671 4,637,312 c. Securities lending liability 0 0 d. Total liabilities $ 4,444,036 $ 4,637,312 7. Total market value of assets available for benefits $ 6,085,517,735 $ 6,452,469,800 (Item 5 - Item 6) B. Breakdown 1. State employees $ 2,288,446,139 $ 2,428,989,395 2. Teachers 3,510,586,538 3,730,047,183 3. Teachers' survivors benefits 286,485,058 293,433,222 4. Total $ 6,085,517,735 $6,452,469,800 20
Section C Table 7 Reconciliation of Plan Net Assets Item (1) Year Ending June 30, 2016 State Employees Teachers (2) (3) 1. Market value of assets at beginning of year $ 2,428,989,395 $ 3,730,047,183 Current year prior period adjustments 1,941,082 2,978,415 Adjusted market value of assets at BOY $ 2,430,930,476 $ 3,733,025,598 2. Contributions a. Members $ 40,790,776 $ 49,322,544 b. Employers 159,534,421 225,569,556 c. Reimbursement of Supplemental Pensions 46,185 893,226 d. Service purchases 313,857 242,555 e. Total $ 200,685,239 $ 276,027,881 3. Investment earnings, net of investment and administrative expenses $ (5,381,856) $ (8,252,029) 4. Expenditures for the year a. Benefit payments $ (258,739,848) $ (370,810,041) b. Cost-of-living adjustments (66,662,417) (112,357,891) c. Death benefits (1,726,878) (1,151,777) d. Social security supplements (6,461,871) (2,849,185) e. Supplemental pensions (46,185) (893,226) f. Refunds (3,901,219) (2,405,021) g. Total expenditures $ (337,538,418) $ (490,467,141) 5. Transfers and other adjustments $ (249,302) $ 252,229 6. Market value of assets at end of year $ 2,288,446,139 $ 3,510,586,538 21
Section C Table 8A Development of Actuarial Value of Assets (State Employees) Year Ending June 30, 2016 1. Market value of assets at beginning of year (prior to adjustment) $ 2,428,989,395 2. Net new investments a. Contributions $ 200,685,239 b. Benefits paid (333,637,199) c. Refunds (3,901,219) d. Transfers (249,302) e. Subtotal (137,102,481) 3. Market value of assets at end of year $ 2,288,446,139 4. Net earnings (3-1-2) (includes misc revenues) $ (3,440,775) 5. Assumed investment return rate for fiscal year 7.50% 6. Expected return $ 177,032,862 7. Excess return (4-6) $ (180,473,637) 8. Development of amounts to be recognized as of June 30, 2016: Fiscal Year End Remaining Deferrals of Excess (Shortfall) of Offsetting of Net Deferrals Investment Income* Gains/(Losses) Remaining Years Recognized for Remaining after Remaining this valuation this valuation (1) (2) (3) = (1) + (2) (4) (5) = (3) / (4) (6) = (3) - (5) 2012 $ 0 $ 0 $ 0 1 $ 0 $ 0 2013 0 0 0 2 0 0 2014 0 0 0 3 0 0 2015 (47,495,932) 0 (47,495,932) 4 (11,873,983) (35,621,949) 2016 (180,473,637) 0 (180,473,637) 5 (36,094,727) (144,378,910) Total $ (227,969,569) $ 0 $ (227,969,569) $ (47,968,710) $ (180,000,859) 9. Actuarial value of assets as of June 30, 2016 (Item 3 - Item 8) $ 2,468,446,998 10.Ratio of actuarial value to market value 107.9% 22
Section C Table 8B Development of Actuarial Value of Assets (Teachers) Year Ending June 30, 2016 1. Market value of assets at beginning of year $ 3,730,047,183 2. Net new investments a. Contributions $ 276,027,881 b. Benefits paid (488,062,120) c. Refunds (2,405,021) d. Transfers 252,229 e. Subtotal (214,187,031) 3. Market value of assets at end of year $ 3,510,586,538 4. Net earnings (3-1-2) (includes misc revenues) $ (5,273,614) 5. Assumed investment return rate for fiscal year 7.50% 6. Expected return $ 271,721,525 7. Excess return (4-6) $ (276,995,139) 8. Development of amounts to be recognized as of June 30, 2016: Fiscal Year End Remaining Deferrals of Excess (Shortfall) of Offsetting of Net Deferrals Investment Income* Gains/(Losses) Remaining Years Recognized for Remaining after Remaining this valuation this valuation (1) (2) (3) = (1) + (2) (4) (5) = (3) / (4) (6) = (3) - (5) 2012 $ 0 $ 0 $ 0 1 $ 0 $ 0 2013 0 0 0 2 0 0 2014 0 0 0 3 0 0 2015 (53,553,870) 0 (53,553,870) 4 (13,388,468) (40,165,402) 2016 (276,995,139) 0 (276,995,139) 5 (55,399,028) (221,596,111) Total $ (330,549,009) $ 0 $ (330,549,009) $ (68,787,496) $ (261,761,513) 9. Actuarial value of assets as of June 30, 2016 (Item 3 - Item 8) $ 3,772,348,051 10.Ratio of actuarial value to market value 107.5% 23
Section C Table 9 Distribution of Assets at Market Value (Percentage of Total Investments) Item (1) June 30, 2016 June 30, 2015 (2) (3) Cash & cash equivalents 3.2% 3.2% U.S. government & agency securities 8.2% 8.2% Corporate bonds & notes 6.3% 6.3% Foreign bonds 3.6% 3.6% U.S. equity securities 23.6% 23.6% Foreign equity securities 23.2% 23.2% Real estate, hedge funds, venture capital, other 31.9% 31.9% Total investments 100.0% 100.0% 24
Section C Table 10 History of Investment Return Rates (Net of Investment and Administrative Expenses) Year Ending June 30 of Market Actuarial (1) (2) (3) 1995 17.0% 10.2% 1996 13.7% 13.7% 1997 19.1% 19.1% 1998 16.1% 16.5% 1999 10.1% 14.7% 2000 9.1% 8.8% 2001-11.0% 4.9% 2002-8.4% 0.9% 2003 2.6% -0.8% 2004 18.7% 0.4% 2005 11.4% 1.8% 2006 11.6% 7.4% 2007 18.2% 13.0% 2008-5.8% 10.7% 2009-20.1% 2.4% 2010 14.0% 0.8% 2011 19.5% 2.1% 2012 1.4% 3.9% 2013 11.0% 6.1% 2014 14.9% 8.2% 2015 2.2% 7.3% 2016-0.2% 5.5% Average Returns: Last 5 Years 5.7% 6.2% Last 10 Years 4.8% 5.9% Since 1995 6.9% 7.0% 25
Section C Table 11A Analysis of Change in Employer Cost Basis (1) State Employees Teachers (2) (3) 1. Employer contribution rates from prior valuation 24.87% 23.13% 2. Impact of changes, gains and losses a. Non-economic liability experience (gain)/loss 0.03% (0.10%) b. Salary (gain)/loss (0.18%) (0.18%) c. Total payroll growth (gain)/loss 0.72% 0.38% d. Investment experience (gain)/loss 0.60% 0.59% e. Actual COLA (0.74%) (0.29%) (0.31%) f. Changes in assumptions/methods 0.00% 0.00% g. Changes in plan provisions 0.00% 0.00% h. Total 0.88% 0.38% 3. Employer contribution rates from current valuation 25.75% 23.51% 26
Section C Table 11B History of Employer Contribution Rates Valuation Date as of Fiscal Year Ending June 30, June 30, Employer Contribution Rate (1) (2) (3) State Employees 2001 2004 9.60% 2002 2005 11.51% 2003 2006 14.84% 2004 2007 18.40% 2005 2008 20.77% 2006 2009 21.64% 1 2007 2010 20.78% 2 2008 2011 20.78% 2009 2012 22.98% 2010 2013 21.18% 3 2011 2014 23.05% 2012 2015 23.33% 2013 2016 23.64% 2014 2017 25.34% 4 2015 2018 24.87% 2016 2019 25.75% Teachers 2001 2004 13.72% 2002 2005 14.84% 2003 2006 16.47% 2004 2007 19.64% 2005 2008 22.01% 2006 2009 20.07% 1 2007 2010 19.01% 2 2008 2011 19.01% 2009 2012 22.32% 2010 2013 19.29% 3 2011 2014 20.68% 2012 2015 22.60% 2013 2016 23.14% 2014 2017 23.13% 4 2015 2018 23.13% 2016 2019 23.51% 1 Restated after adopting the amendment of Article 7. 2 Restated after adopting the amendment of Article 16. 3 Restated after reflecting the Rhode Island Retirement Security Act of 2011. 4 Restated after adopting the amendment of Article 21. 27
Section C - Table 11C Analysis of Change in UAAL Basis (1) State Employees Teachers (2) (3) 1. UAAL as of June 30, 2015 $ 1,895 $ 2,655 2. Impact of changes, gains and losses a. Interest at 7.50% for one year 139 193 b. Expected amortization payments (138) (183) c. Actual amortization payments * 10 10 d. Investment experience (gain)/loss 52 73 e. Actual COLA (0.74%) (20) (35) f. Salary (gain)/loss (11) (20) g. Non-economic liability experience (gain)/loss 9 1 h. Changes in assumptions/methods 0 0 i. Changes in plan provisions 0 0 j. Total $ 41 $ 39 3. UAAL as of June 30, 2016 $ 1,936 $ 2,694 Note: All dollar amounts are shown in millions. The Loss due to Actual Amortization Payments reflects the difference in payroll growth between the valuation that sets the contribution rates for the Fiscal Year, and the actual payroll that is paid during the year. 28
Section C Table 12A Membership Data (State Employees) June 30, 2016 June 30, 2015 June 30, 2014 (1) (2) (3) 1. Active members a. Schedule A, Grandfathered 445 640 784 b. Schedule A, NonGrandfathered 2,531 2,889 3,007 c. Schedule B 8,107 7,665 7,510 d. Total Count 11,083 11,194 11,301 e. Number vested 8,501 8,544 8,652 f. Annualized salaries $ 670,317,639 $ 667,333,687 $653,343,732 g. Average salary 60,482 59,615 57,813 h. Average age 49.9 49.7 49.4 i. Average service 14.6 14.4 14.2 2. Inactive members a. Number 3,071 2,948 2,898 3. Service retirees a. Number 9,047 9,060 9,137 b. Total annual benefits $ 288,340,400 $ 286,003,531 $284,043,840 c. Average annual benefit 31,871 31,568 31,087 d. Average age 73.4 73.1 72.9 4. Disabled retirees a. Number 735 723 707 b. Total annual benefits $ 15,950,720 $ 15,481,835 $14,830,855 c. Average annual benefit 21,702 21,413 20,977 d. Average age 65.3 65.3 65.0 5. Beneficiaries and spouses a. Number 1,276 1,258 1,259 b. Total annual benefits $ 23,934,427 $ 23,464,960 $22,722,834 c. Average annual benefit 18,757 18,653 18,048 d. Average age 76.9 77.0 76.9 29
Section C Table 12B Membership Data (Teachers) June 30, 2016 June 30, 2015 June 30, 2014 (1) (2) (3) 1. Active members a. Schedule A, Grandfathered 146 207 268 b. Schedule A, NonGrandfathered 2,664 2,820 2,994 c. Schedule B 10,396 10,245 10,004 d. Number 13,206 13,272 13,266 e. Number vested 11,038 11,166 11,232 f. Annualized salaries $ 967,531,930 $968,080,817 $951,892,247 g. Average salary 73,265 72,942 71,754 h. Average age 46.0 45.8 45.6 i. Average service 14.6 14.3 14.0 2. Inactive members a. Number 3,313 3,185 3,040 3. Service retirees a. Number 10,235 10,075 10,019 b. Total annual benefits $ 458,750,420 $454,343,183 $450,382,624 c. Average annual benefit 44,822 45,096 44,953 d. Average age 71.5 71.0 70.5 4. Disabled retirees a. Number 297 294 288 b. Total annual benefits $ 8,836,159 $8,707,158 $8,498,649 c. Average annual benefit 29,751 29,616 29,509 d. Average age 65.9 65.5 65.4 5. Beneficiaries and spouses a. Number 555 533 531 b. Total annual benefits $ 14,142,548 $13,673,726 $13,442,185 c. Average annual benefit 25,482 25,654 25,315 d. Average age 74.0 73.6 73.2 30
Section C Table 13 Valuation as of Percent Amount in Percent Percent Average Average June 30, Number Increase $ Millions Increase $ Amount Increase Age Service (1) (2) (3) (4) (5) (6) (7) (8) (9) State Employees 2005 12,789-1.3% 576 0.0% 45,019 1.3% 47.8 14.5 2006 12,817 0.2% 612 6.2% 47,726 6.0% 47.9 14.4 2007 12,572-1.9% 626 2.4% 49,809 4.4% 48.2 14.7 2008 11,970-4.8% 618-1.4% 51,598 3.6% 48.6 14.9 2009 11,023-7.9% 575-7.0% 52,125 1.0% 48.1 13.6 2010 11,122 0.9% 600 4.4% 53,936 3.5% 48.6 13.8 2011 11,233 1.0% 617 2.9% 54,949 1.9% 48.8 14.0 2012 11,166-0.6% 644 4.3% 57,667 4.9% 49.1 14.2 2013 11,280 0.4% 650 5.3% 57,624 4.9% 49.2 14.1 2014 11,301 0.2% 653 0.5% 57,813 0.3% 49.4 14.2 2015 11,194-0.9% 667 2.1% 59,615 3.1% 49.7 14.4 2016 11,083-1.0% 670 0.4% 60,482 1.5% 49.9 14.6 Teachers Historical Summary of Active Member Data Active Members Total Salaries Average Salary 2005 14,469-0.6% 840 3.7% 58,081 4.4% 44.1 12.1 2006 14,343-0.9% 859 2.3% 59,915 3.2% 44.3 12.2 2007 14,146-1.4% 902 5.0% 63,777 6.4% 44.6 12.5 2008 13,999-1.0% 928 2.9% 66,308 4.0% 44.9 12.8 2009 13,689-2.2% 931 0.3% 68,010 2.6% 45.0 12.9 2010 13,530-1.2% 937 0.6% 69,235 1.8% 44.9 12.9 2011 13,381-1.1% 966 3.1% 72,174 4.2% 45.2 13.3 2012 13,212-1.3% 962-0.4% 72,809 0.9% 45.3 13.4 2013 13,193-1.4% 936-3.1% 70,965-1.7% 45.4 13.6 2014 13,266 0.6% 952 1.7% 71,754 1.1% 45.6 14.0 2015 13,272 0.0% 968 1.7% 72,942 1.7% 45.8 14.3 2016 13,206-0.5% 968-0.1% 73,265 0.4% 46.0 14.6 31
Section C - Table 14A 0 1 2 3 4 5-9 10-14 15-19 20-24 25-29 30-34 35 & Over Total Attained Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Age Distribution of Active Members by Age and by Years of Service (State Employees) As of June 30, 2016 Years of Credited Service Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Under 25 49 27 16 5 0 1 0 0 0 0 0 0 98 $39,673 $36,899 $29,235 $42,246 $0 $35,161 $0 $0 $0 $0 $0 $0 $37,290 25-29 113 117 97 77 39 78 3 0 0 0 0 0 524 $47,528 $43,035 $43,793 $47,376 $48,893 $49,504 $32,027 $0 $0 $0 $0 $0 $46,118 30-34 74 80 83 115 61 299 85 0 0 0 0 0 797 $53,593 $53,697 $48,588 $50,100 $55,110 $51,783 $50,668 $0 $0 $0 $0 $0 $51,704 35-39 50 65 70 78 57 243 238 58 0 0 0 0 859 $58,189 $48,414 $46,619 $51,236 $60,353 $53,613 $57,686 $59,629 $0 $0 $0 $0 $54,682 40-44 52 60 56 55 33 213 271 225 22 1 0 0 988 $45,996 $59,053 $45,101 $51,201 $55,683 $55,175 $58,834 $66,213 $65,986 $30,160 $0 $0 $57,885 45-49 60 52 65 63 35 251 258 312 199 183 0 0 1,478 $54,279 $53,898 $45,329 $57,172 $52,209 $54,890 $59,534 $66,862 $73,343 $65,663 $0 $0 $61,600 50-54 65 67 64 77 55 287 248 251 241 486 115 5 1,961 $50,559 $46,036 $48,391 $52,803 $49,431 $53,694 $57,415 $65,773 $73,165 $70,601 $69,566 $77,618 $62,592 55-59 32 49 43 75 51 235 271 285 215 436 296 87 2,075 $43,284 $53,796 $55,109 $54,464 $53,809 $50,994 $55,773 $65,740 $71,116 $72,614 $77,688 $64,823 $64,886 60-64 26 19 34 37 34 173 230 245 172 287 144 124 1,525 $66,808 $51,737 $53,286 $49,389 $60,496 $51,495 $57,337 $62,129 $67,888 $71,872 $73,487 $75,747 $64,271 65 & Over 11 11 6 10 12 83 125 114 92 149 71 94 778 $59,480 $79,899 $54,492 $49,849 $68,534 $52,693 $58,038 $59,484 $68,535 $66,426 $75,425 $80,210 $65,152 Total 532 547 534 592 377 1,863 1,729 1,490 941 1,542 626 310 11,083 $50,566 $50,096 $46,984 $51,540 $54,949 $52,932 $57,393 $64,741 $71,150 $70,391 $74,973 $74,065 $60,482 32
Section C Table 14B Distribution of Active Members by Age and by Years of Service (Teachers) As of June 30, 2016 Years of Credited Service 0 1 2 3 4 5-9 10-14 15-19 20-24 25-29 30-34 35 & Over Total Attained Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Count & Age Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Avg. Comp. Under 25 29 56 29 1 1 1 0 0 0 0 0 0 117 $54,169 $39,133 $42,432 $47,260 $52,015 $53,798 $0 $0 $0 $0 $0 $0 $43,982 25-29 68 174 190 140 109 120 0 0 0 0 0 0 801 $65,201 $40,152 $44,214 $47,319 $51,087 $54,278 $0 $0 $0 $0 $0 $0 $48,099 30-34 30 108 94 91 136 614 156 0 0 0 0 0 1,229 $67,820 $46,492 $47,706 $49,723 $53,385 $60,244 $72,970 $0 $0 $0 $0 $0 $58,339 35-39 21 68 60 53 69 355 838 246 0 0 0 0 1,710 $102,977 $49,034 $53,418 $51,634 $57,803 $66,380 $76,424 $78,132 $0 $0 $0 $0 $71,495 40-44 14 42 50 49 48 214 527 953 137 0 0 0 2,034 $88,722 $55,782 $55,409 $64,478 $61,460 $67,981 $77,595 $78,800 $81,742 $0 $0 $0 $75,811 45-49 27 33 40 47 43 196 396 749 633 141 0 0 2,305 $62,926 $49,022 $57,423 $58,950 $58,456 $66,945 $78,300 $79,877 $81,880 $83,990 $0 $0 $77,452 50-54 11 27 28 23 28 128 291 404 339 506 60 0 1,845 $81,021 $56,947 $52,972 $60,805 $59,345 $67,787 $77,350 $79,273 $82,050 $83,667 $84,671 $0 $78,816 55-59 7 13 18 17 21 80 216 394 274 345 173 18 1,576 $55,802 $60,905 $58,778 $60,760 $65,592 $68,233 $77,758 $79,782 $81,913 $82,410 $82,662 $93,567 $79,441 60-64 5 9 4 9 11 53 149 297 272 272 68 42 1,191 $71,533 $53,841 $57,819 $49,235 $58,313 $67,963 $77,272 $79,261 $81,407 $82,185 $84,377 $82,849 $79,369 65 & Over 1 7 4 2 3 18 44 96 77 88 23 35 398 $61,800 $49,174 $62,810 $71,188 $71,765 $73,719 $81,101 $79,183 $81,088 $82,301 $89,454 $85,112 $80,489 Total 213 537 517 432 469 1,779 2,617 3,139 1,732 1,352 324 95 13,206 $69,691 $45,907 $49,152 $52,964 $55,925 $64,000 $77,078 $79,244 $81,798 $82,993 $83,876 $85,714 $73,265 33
Appendix A SUMMARY OF ACTUARIAL METHODS AND ASSUMPTIONS I. Valuation Date The valuation date is June 30th of each plan year. This is the date as of which the actuarial present value of future benefits and the actuarial value of assets are determined. II. Actuarial Cost Method The actuarial valuation uses the Entry Age actuarial cost method. Under this method, the employer contribution rate is the sum of (i) the employer normal cost rate, and (ii) a rate that will amortize the unfunded actuarial accrued liability (UAAL). 1. First, the actuarial present value of future benefits is determined by discounting the projected benefits for each member back to the valuation date using the assumed investment return rate as the discount rate. For active members, the projected benefits are based on the member s age, service, gender and compensation, and based on the actuarial assumptions. The calculations take into account the probability of the member's death, disability, or termination of employment prior to becoming eligible for a retirement benefit, as well as the possibility of the member will remain in service and receive a service retirement benefit. Future salary increases are anticipated. The present value of the expected benefits payable to all active members is added to the present value of the expected future payments to retired participants and beneficiaries to obtain the present value of all expected benefits. Liabilities for future members are not included. 2. The employer contributions required to support the benefits are determined as a level percentage of salary, and consist of a normal contribution and an amortization contribution. 3. The normal contribution is determined using the Entry Age Normal method. Under this method, a calculation is made to determine the rate of contribution which, if applied to the compensation of each individual member during the entire period of anticipated covered service, would be required to meet the cost of all benefits payable on his behalf. The salary-weighted average of these rates is the normal cost rate. This calculation reflects the plan provisions that apply to each individual member. 4. The employer normal cost rate is equal to (i) the normal cost rate, minus (ii) the member contribution rate. 5. The actuarial accrued liability is equal to the present value of all benefits less the present value of future normal costs. The present value of the supplemental 34